In order to determine a market projection, several factors were considered including the nature of government funding, technology and technology fatigue, and competitive forces. The market is still in a highly volatile state, and new developments are coming along constantly, making it an unpredictable time for all of the companies involved in the market.
The pace of innovation could also prove to be a market limiter. The introduction of second-generation systems has enabled new levels of productivity and new experiments, causing rapid adoption of the products. But there is a flip side to the constant innovation—the demand could slow if labs experience growing pains with the new sequencers.
Many are still trying to address bottlenecks such as the data-management and data-analysis issues. The situation is aggravated because competition has increased, and the end-users are faced with a variety of evolving dilemmas and trade-offs. One technology usually isn’t sufficient, but using multiple sequencer technologies creates integration and workflow issues.
The depreciation of instruments, data management, labor, and other factors has caused the cost of sequencing to be higher than the often-quoted figures, which are related mostly to reagent use. After sorting through some unforeseen issues with second-generation systems, customers are looking out for pitfalls before starting this process all over again with third-generation sequencers.
The high price, performance, and variety of second-generation sequencers could result in a broad first-to-market effect over the third-generation systems; most likely, some labs will simply postpone purchases but will eventually move to the newest technologies. While the new systems have their own performance improvements, they require labs to set up, change, and/or fine-tune their procedures, re-train their personnel, and keep tabs on the different products.
Given these considerations, Kalorama Information believes that the market for sequencers of $480 million in 2008 will peak at $640 million in 2012, then roll downward a bit to $600 by 2014.
We do not believe that sequencers will be limited to research applications forever. The pharmaceutical industry is expected to become a strong customer segment in the near future, due to lower cost and the realization that personalized medicine, biomarkers, and other related post-genomic approaches are likely to help shrinking pipelines.
In the longer term, given the way the science is evolving, the largest opportunity for sequencing technologies may actually be in the doctor’s office or hospital. Some envision portable sequencers within the next 10 years, which does not seem completely unreasonable.
In the near term, it is more likely that existing products will be adapted to specific clinical applications, which has already occurred, for example with HIV drug resistance testing or HLA typing. In order to move the new technologies beyond this early stage, companies will need to be aware of the regulatory processes and other pitfalls of the market. This is ideally addressed through partnering with established companies in the diagnostics industry.